In The
Court of Appeals
Ninth District of Texas at Beaumont
____________________
NO. 09-14-00058-CV
____________________
DOMINO’S PIZZA, L.L.C.
V.
RAGHURAMI B. REDDY, AS GUARDIAN OF THE PERSON AND
ESTATE OF DEVAVARAM CHRISTOPHER AND OF THE ESTATE OF
RUTH CHRISTOPHER
__________________________________________________________________
On Appeal from the 58th District Court
Jefferson County, Texas
Trial Cause No. A-192,970
__________________________________________________________________
MEMORANDUM OPINION
In August 2012, a vehicle driven by Joshua Balka, a pizza delivery driver,
hydroplaned due to a bald tire and wet pavement and struck the vehicle of
Devavaram and Ruth Christopher, killing Ruth and injuring Devavaram. Balka was
employed by MAC Pizza Management, Inc., a franchisee of Domino’s Pizza,
L.L.C. The police officer called to the scene cited Balka for failing to control his
speed and for having an unsafe or defective tire. Raghurami B. Reddy, as Guardian
1
of the Person and Estate of Devavaram Christopher and of the Estate of Ruth
Christopher, sued MAC and Domino’s for negligence. Reddy settled with MAC
before trial.
A jury found that (1) Balka was 10 percent negligent, MAC was 30 percent
negligent, and Domino’s was 60 percent negligent; (2) Domino’s controlled or had
the right to control the details of the injury-producing acts or omissions of MAC
and its employees; (3) Domino’s failed to exercise ordinary care in the control or
right to control those details; (4) this failure to exercise ordinary care was the
proximate cause of the occurrence in question; and (5) Balka was operating his
vehicle in furtherance of a mission for the benefit of Domino’s and subject to
Domino’s control. In seven appellate issues, Domino’s challenges (1) the legal
sufficiency of the evidence to support duty, breach, causation, and damages; (2) the
effect of Reddy’s settlement with MAC; (3) the trial court’s failure to include
certain instructions in the jury charge; (4) the propriety of Reddy’s jury argument;
and (5) the trial court’s settlement credit. We reverse the trial court’s judgment and
render judgment dismissing Reddy’s claims against Domino’s.
Legal Sufficiency
In issue one, Domino’s contends that the evidence is legally insufficient to
establish that it owed a duty to the Christophers because, according to Domino’s, it
2
had no right to control MAC’s day-to-day operations, did not exercise control over
the injury-producing acts, and could not be held vicariously liable. Under legal
sufficiency review, we consider whether the evidence “would enable reasonable
and fair-minded people to reach the verdict under review.” City of Keller v. Wilson,
168 S.W.3d 802, 827 (Tex. 2005). We view the evidence in the light most
favorable to the verdict, credit favorable evidence if a reasonable factfinder could,
and disregard contrary evidence unless a reasonable factfinder could not. Del Lago
Partners, Inc. v. Smith, 307 S.W.3d 762, 770 (Tex. 2010).
“An independent contractor is one who, in pursuit of an independent
business, undertakes specific work for another using his or her own means and
methods without submitting to the control of the other person as to the details of
the work.” Farlow v. Harris Methodist Fort Worth Hosp., 284 S.W.3d 903, 911
(Tex. App.—Fort Worth 2009, pet. denied). When determining whether a
franchisor is vicariously liable for a franchisee’s conduct, we consider whether the
franchisor has the right to control the franchisee with respect to the details of that
conduct. See State Farm Mut. Auto. Ins. Co. v. Traver, 980 S.W.2d 625, 627 (Tex.
1998). A party can prove the right to control by evidence of (1) a contractual
agreement that explicitly assigns the franchisor a right to control; or (2) the
franchisor’s actual exercise of control. Coastal Marine Serv. of Tex. v. Lawrence,
3
988 S.W.2d 223, 226 (Tex. 1999). “To trigger vicarious liability, the right to
control must extend to the specific activity from which the injury arose.” Farlow,
284 S.W.3d at 911-12. Several factors aid the right of control determination: (1)
the independent nature of the business; (2) the obligation to furnish tools, supplies,
and materials; (3) the right to control work progress, except as to final results; (4)
the time of employment; and (5) the method of payment. Id. at 911.
“A contract expressly providing that a person is an independent contractor is
determinative of the relationship absent evidence that the contract is a mere sham
or subterfuge designed to conceal the true legal status of the parties or that the
contract has been modified by a subsequent agreement between the parties.” Id.
“Evidence that the parties did not intend for an independent contractor relationship
can come from the contract itself, i.e., whether, despite language describing the
relationship as an independent contractor relationship, other contract language
evidences such a right of control that the relationship is actually that of
employer/employee.” Id. “It can also come from extrinsic evidence, such as
instances of actual control by the principal sufficient to show that the true
agreement of the parties vested a right of control establishing an employment
relationship.” Id.
4
According to the franchise agreement, the relationship between MAC and
Domino’s is that of independent contractor. The contract requires MAC to retain
various business records and to submit sales reports and financial statements to
Domino’s “from time to time[.]” MAC agreed to participate in “all training
programs and classes . . . require[d] for the operation of a Domino’s Pizza Store[,]”
as well as supplemental training, but MAC is responsible for costs incurred during
the training. MAC must abide by all specifications, standards, operating
procedures, and rules prescribed for the operation of a Domino’s Pizza store.
Thomas Moyes, MAC’s vice-president of operations, testified that Domino’s sends
a certified letter when rules are not followed and instructs how to correct the
problem or the franchise agreement could be cancelled.
The contract also gives Domino’s “full access, either on-site or from a
remote location, to all of [MAC’s] computer data, equipment and systems
containing any and all of the information, records and reports required[.]” For a
fee, Domino’s licenses its PULSE computer software to MAC for use in running
the store’s operating system. Under the Online Ordering Franchisee Agreement,
online orders are placed at Dominos.com and forwarded to MAC through PULSE.
According to Moyes and Christopher Childs, Balka’s store manager, Domino’s has
full access to PULSE and can evaluate delivery times through PULSE.
5
The Domino’s Manager’s Reference Guide sets forth the “minimum
guidelines for the operation of all Domino’s Pizza stores, both company-owned
stores and franchise-owned stores, in order to promote the Domino’s Pizza brand
and trademarks in a favorable manner.” The Guide covers several topics, including
driver requirements and conduct, use of cellular telephones during business hours,
closing procedures, sanitation, delivery vehicles, minimum standard store hours,
use of trademarks, uniform standards, employee grooming and appearance
standards, use of approved heat-retaining containers, and pest control. Childs and
Moyes testified that the Guide addresses every aspect of the store’s operations, and
Moyes testified that MAC only has the control that Domino’s allows it to have.
Joseph Devereaux, director of franchise services for Domino’s, explained
that franchisors, like Domino’s, have a set standard of business practices to ensure
consistency among franchisees and to positively promote the brand. Devereaux
admitted that Domino’s makes, changes, and enforces the rules. However, he and
Moyes agreed that the Guide provides the minimum requirements MAC must
follow and that MAC has authority to strengthen those rules. Devereaux testified
that the franchisee is in charge of the details for implementing these rules. Childs
agreed that MAC implements Domino’s minimum standards and has the authority
to raise those standards if it chooses.
6
Specifically, the Guide requires that a delivery driver’s vehicle be inspected
at the point of hire and periodically thereafter, but did not detail how those
inspections should be performed. Childs testified that MAC decides the details of
how and when to conduct inspections. He testified that, instead of periodic
inspections, MAC checked drivers’ state inspection stickers. Childs testified that if
Domino’s had enforced the rule for periodic inspections, Balka’s vehicle would
have been inspected accordingly. Childs testified that Domino’s could have
inspected the drivers’ vehicles, but never asked to do so. Moyes explained that
Domino’s did not conduct vehicle inspections and MAC did not provide Domino’s
with the results of MAC’s inspections. After the accident, MAC changed the
details of its vehicle inspections.
Additionally, the franchise agreement limits MAC’s delivery area. Childs
testified that pizzas are not delivered outside a nine-minute delivery area. Moyes
testified that Domino’s prefers delivery areas under nine minutes from the store so
that pizzas can be delivered safely in less than thirty minutes from when an order is
taken. Devereaux testified that the goal is to deliver pizzas within thirty minutes.
Childs explained that, once an order is received, twenty-one minutes are allotted
for preparation and nine minutes for delivery. Balka testified that, on the night of
the accident, he was driving too fast under the circumstances so the pizza would be
7
delivered timely, but he was never told to drive unsafely and did not feel pressured
to drive unsafely. Childs and Moyes testified that Balka was serving Domino’s
purposes when the accident occurred.
Pursuant to the franchise agreement, Domino’s retained the right to require
an audit and to conduct certain inspections at any time during business hours and
without prior notice to MAC. According to Childs, Domino’s management
conducts an Operations Evaluation Report (“O.E.R.”) 1 about every three months.
He testified that a Domino’s manager visits the store at least monthly, has full
access to the store, and if the manager tells Childs to do something, Childs must
comply. Moyes testified that a Domino’s employee comes to the store every two to
three months. Devereaux testified that Domino’s employees are physically present
in the store approximately three to four times per year. Childs admitted that no
Domino’s employees work in the store and that, unlike Domino’s corporate
employees, MAC corporate employees are present in the store about four to five
times per week.
Childs testified that MAC employees are financially motivated to obtain a
high-scoring review and that one item on the O.E.R. focuses on the speed of
delivery. He testified that it hurts the drivers’ pay performance if deliveries take
1
Childs refers to the report as an “Operations Excellence Review” but the
report itself is called an “Operations Evaluation Report.”
8
longer than nine minutes. Moyes testified that the O.E.R. will score lower if
delivery times are not what they should be, and a poor score can affect a manager’s
bonus or employment. Devereaux explained that O.E.R. information is gathered
through PULSE and delivery times play a role in the O.E.R. Childs testified that
Domino’s encouraged competition to improve job performance, so Childs created a
competition for drivers and posted results on who drove the fastest. Moyes
admitted that Domino’s never ratified this competition, nor was the payment of an
incentive suggested or promoted by Domino’s. Devereaux testified that Domino’s
does not promote pay incentives for drivers based on the speed of delivery.
Balka and Childs both testified that Domino’s controls and has the right to
control the store’s daily activities. 2 Balka testified that he was required to follow
Domino’s rules and he wore Domino’s branded clothing, delivered pizza in
Domino’s pizza boxes and heating containers, and had a Domino’s sign for his
vehicle. However, he admitted that his paycheck comes from MAC. Childs also
testified that he receives a paycheck from MAC and is an employee of MAC.
When potential employees complete an application on the Domino’s website,
Domino’s forwards the applications to MAC to handle the details of hiring
employees. Childs and Moyes testified that MAC handles the store’s daily
2
Balka testified that when he first began delivering pizzas, he believed he
worked for Domino’s and he knew nothing about MAC.
9
operations, owns the store’s equipment, and controls the store’s details and
specifics, such as vehicle inspections, implementation of incentives, acceptance of
pizza orders, standards for drivers, pizza prices, provision of uniforms, repairs,
donations, marketing, and decisions regarding the hiring, firing, paying,
supervising, scheduling, disciplining, and training of employees.
Childs and Moyes both testified that MAC receives training materials from
Domino’s, but Childs testified that MAC conducts its own Management Team
Member Safety Awareness presentation, and Moyes testified that Domino’s does
not train MAC’s employees. Balka testified that MAC employees conduct training
at the store. In accordance with the franchise agreement, MAC is responsible for
training its own employees, with the sole responsibility “for training the employees
to legally, safely and properly perform his or her duties while inside the Store and
while outside the Store for business purposes including training [its] employees to
follow appropriate procedures for their safety and well-being.”
Devereaux testified that franchisees, like MAC, pay a weekly royalty fee to
Domino’s, have the right to use Domino’s trademarks and the uniform business
format, and have the right to control day-to-day operations. Devereaux also
testified that Domino’s has no legal relationship with a franchisee’s employees.
The franchise agreement expressly provides that MAC acknowledges and
10
understands that it is not Domino’s responsibility or duty to train employees or to
operate the store and that Domino’s does not have the legal right to direct MAC’s
employees in the operation of the store. Domino’s agreed to provide “reasonable
operating assistance[,]” but the agreement expressly states that such assistance is
not an assumption of MAC’s responsibilities or duties. The agreement states that
the store would at all times be under MAC’s supervision, that MAC is responsible
for recruiting, hiring, training, scheduling, supervising, and paying its employees,
and that these persons are employees of MAC, not Domino’s.
On appeal, Reddy maintains that Domino’s had both a contractual right of
control and actual control. According to Reddy, “[c]opious evidence in the contract
and the record indicates that the ‘independent contractor’ franchise agreement was
a sham because Domino’s had a contractual right to control every minutiae at
MAC’s . . . store including the injury-causing activity.” Reddy points to the
following evidence to support his contention: (1) MAC must comply with
Domino’s specifications, standards, and operating procedures, including the
“methods and procedures relating to receiving, preparing, and delivering customer
orders[;]” (2) Domino’s can unilaterally modify its standards and procedures and
can conduct inspections; (3) Domino’s may terminate the franchise agreement if
MAC fails to comply with corporate standards and procedures; (4) Domino’s
11
standards regulate driver age and history, safety, vehicle inspections, and driver
conduct during deliveries; (5) the corporate guidelines promote speeding among
delivery drivers by use of the thirty-minute rule, PULSE time tracking, evaluations
that factored delivered times into their scores and affected bonuses, and
encouragement of incentives to improve job performance; and (6) Domino’s
decided the store’s delivery area and provided directions and maps through
PULSE.
The franchise agreement expressly provides that (1) MAC is an independent
contractor; (2) the store’s staff members are employed by MAC, not Domino’s; (3)
Domino’s has no legal right to direct MAC’s employees; (4) MAC is solely
responsible for recruiting, hiring, training, scheduling, supervising, and paying its
employees; (5) MAC is solely responsible for operating the store; and (6)
Domino’s does not assume MAC’s responsibilities by providing “reasonable
operating assistance.” That Domino’s retains the right to terminate the franchise
agreement, retains a right to receive evaluations and other reports, has a right to
conduct inspections, or requires MAC to comply with Domino’s procedures and
rules is not evidence that Domino’s had the right of control. See Shell Oil Co. v.
Khan, 138 S.W.3d 288, 295 (Tex. 2004) (“It has long been the rule that a right to
receive reports is not a right to control.”); Dow Chem. Co. v. Bright, 89 S.W.3d
12
602, 606-07 (Tex. 2002) (Rejecting argument that Dow had a right to control by
virtue of requiring Bright to comply with Dow’s rules and regulations.); see also
Johnston v. Oiltanking Houston, L.P., 367 S.W.3d 412, 419 (Tex. App.—Houston
[14th Dist.] 2012, no pet.) (A right to direct when to start, stop, or resume work
does not impose liability.); Ellwood Tex. Forge Corp. v. Jones, 214 S.W.3d 693,
700 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) (A right to inspect
progress is insufficient to establish a right of control.); Bell v. VPSI, Inc., 205
S.W.3d 706, 714, 720 (Tex. App.—Fort Worth 2006, no pet.) (The right to
terminate an agreement and requirements for compliance with applicable practices,
laws, and regulations that relate to performance of the agreement are not evidence
of a right to control the details of the work.). Although Domino’s has authority to
modify its own rules and regulations, the right to prescribe alterations and
deviations is not the type of supervisory control sufficient for imposing a duty on
Domino’s. See Johnston, 367 S.W.3d at 419. “A possibility of control is not
evidence of a ‘right to control’ actually retained or exercised.” Lawrence, 988
S.W.2d at 226.
Nor is the franchise agreement’s independent contractor provision negated
by the fact that Domino’s has set general minimum operational standards for MAC
to follow. See Fitz v. Days Inns Worldwide, Inc., 147 S.W.3d 467, 473 (Tex.
13
App.—San Antonio 2004, pet. denied)(op. on reh’g). These rules and regulations
gave MAC the right to control the means, methods, and details of operating the
store and the record demonstrates that MAC is free to expound upon the Domino’s
store rules. While Domino’s corporate conducts the O.E.R., MAC both pays
earned bonuses and sets incentives. MAC owns the stores’ equipment, trains its
own employees, including drivers, has its own training director, is responsible for
the store’s daily operations, including the details of vehicle inspections, and, unlike
Domino’s corporate employees, MAC corporate employees visit the store several
times per week. The franchise agreement merely sets forth the standards related to
the work; the responsibility of implementing the details of those standards is left to
MAC’s discretion. Neither an occasional assertion of control or sporadic action
directing the details of the work is sufficient to destroy the agreement forming the
basis of the parties’ independent contractor relationship. See White v. DR & PA
Deliverance, Ltd., No. 01-12-00227-CV, 2014 Tex. App. LEXIS 2091, at *6 (Tex.
App.—Houston [1st Dist.] Feb. 25, 2014, no pet.) (mem. op.).
Nevertheless, Reddy maintains that Domino’s may be liable for
unreasonably increasing the risk of harm. “[A] contract requiring independent
contractors to comply with general safety practices and train their employees to do
so cannot constitute a right to control[.]” Khan, 138 S.W.3d at 293-94. Rather,
14
requiring an independent contractor’s employees to “learn and follow general
safety procedures subjects an owner only to a narrow duty to avoid increasing the
risk of injury.” Id. at 294. Reddy’s petition did not assert that Domino’s increased
the risk of injury. See Bright, 89 S.W.3d at 609, 611 (noting that Bright never
alleged that Dow’s safety requirements and procedures unreasonably increased the
probability and severity of injury to Bright). Nor did the jury charge contain a
question as to this issue. See Transit Mix Concrete & Materials Co. v. Johnson,
205 S.W.3d 92, 96 (Tex. App.—Eastland 2006, pet. denied) (noting that the jury
charge did not include an issue on whether Trinity’s safety regulations
unreasonably increased the probability and severity of injury). Moreover, Reddy
pleaded that Domino’s failed to (1) implement appropriate, sound, and safe rules
and regulations; and (2) monitor, supervise, and enforce rules and regulations.
Failing to implement a safety rule does not amount to actual control. See Bright, 89
S.W.3d at 609. As previously discussed, the means, methods, and details of
implementing Domino’s standards were left to MAC’s discretion, MAC was
responsible for training its own employees, including drivers, and Domino’s did
not approve incentives for faster deliveries. See Hoechst-Celanese Corp. v.
Mendez, 967 S.W.2d 354, 357 (Tex. 1998) (The duty of care is commensurate with
the control the party retains over the independent contractor’s work, i.e., when the
15
party provides detailed instructions on the means or methods of carrying out
work.). MAC conducted no independent safety inspections of its own, but relied on
its drivers to obtain state-required inspections, and did not inform Domino’s of
their reliance on state inspections, or the results of those inspections. The record
does not indicate that Domino’s knew MAC was not conducting periodic
inspections. “To hold that the imposing of contractual safety requirements, alone,
on independent contractors somehow subjects the employer either to a duty to
prevent an independent contractor’s negligent conduct or to liability for an
independent contractor’s negligence in failing to comply with safety requirements
would deter general contractors from imposing even minimum safety rules and
requirements.” Bell, 205 S.W.3d at 721.
Based on the record before us, we conclude that the evidence is legally
insufficient to support the jury’s finding that Domino’s controlled or had the right
to control the details of the injury-producing acts or omissions of MAC and its
employees. See Smith, 307 S.W.3d at 770; see also Wilson, 168 S.W.3d at 827.
The record indicates that MAC was free to use its own means and methods as to
the details of its work. See Traver, 980 S.W.2d at 627; see also Farlow, 284
S.W.3d at 911. We sustain issue one and need not address Domino’s remaining
16
issues. See Tex. R. App. P. 47.1. We reverse the trial court’s judgment and render
judgment dismissing Reddy’s claims against Domino’s.
REVERSED AND RENDERED.
______________________________
STEVE McKEITHEN
Chief Justice
Submitted on January 22, 2015
Opinion Delivered March 19, 2015
Before McKeithen, C.J., Kreger and Johnson, JJ.
17